Pot sector forecast to be worth $3B less than estimated
Canada’s cannabis industry will be worth just $5 billion by 2021 — far less than previously estimated, according to a new report from U.S. research firm Brightfield Group, which extrapolated the industry’s value based on recreational pot sales post-legalization. Between mid- October and the end of 2018, total cannabis sales in Canada, in both the medical and adult-use markets was about $210 million due primarily to product shortfall from licensed producers, and a major drop in demand from medical consumers of cannabis. Chicago-based Brightfield had previously estimated the Canadian sector to be worth roughly $8 billion by 2021. This is the first time, however, that actual data of recreational sales across Canada is being used to estimate how big the industry is poised to become. Brightfield’s latest forecast appears to be relatively conservative.
“To give you some context, in Colorado, with a population of four million, they sell about a billion dollars worth of cannabis in a year. When the recreational market was announced here in Canada, there was so much hype and hope that the rollout was going to be strong. We didn’t see that,” said Bethany Gomez, managing director of Brightfield Group.
The relatively modest sales are in contrast to the $43 billion in market valuation of the country’s top 10 cannabis companies, eight times more than Brightfield’s forecast of Canada’s domestic industry. A similar analysis of the industry by New Frontier Data, another U.S. cannabis research firm, noted that the Canadian pot industry could be worth up to $9.2 billion by 2025. Two critical factors are contributing to subdued sales in the post-legalization environment, according to the Brightfield report. First, product availability has been limited, and the kinds of products that are legal to consumers — flower and oils — is not nearly enough to lure them away from the black market.